Question 1

Under trade agreements signed with other countries,the United States is allowed to impose tariffs on imports if foreign firms are selling products in the United States at below their production cost.This is exactly what occurred when the United States raised the tariff on wire hangers imported from China.At the time the tariff was imposed,it was estimated that the tariff would save about ________ jobs in U.S factories making wire hangers at an annual cost per job saved of about ________.

Accepted Answer

The tariff on wire hangers from China was estimated to save about 300 jobs in U.S. factories at an annual cost per job saved of about $400,000.

Question 2

The United States would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Accepted Answer

The elimination of tariffs and quotas would allow for increased international trade, leading to lower prices for consumers, increased competition, and greater economic efficiency for the United States, even if other countries do not reciprocate.

Question 3

a.Distinguish between a tariff and a quota.
b.In what ways are tariffs and quotas similar?
c.In what ways are tariffs and quotas different?
d.Why might a foreign producer prefer a quota rather than a tariff?

Accepted Answer

The answer of a.Distinguish between a tariff and a quota.
b.In...

Question 4

Which of the following statements is true?

Accepted Answer

According to the statement, the U.S. economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas. This means that the U.S. would benefit from increased trade and economic efficiency regardless of whether other countries reciprocate the action.

Question 5

Which of the following is common to both tariffs and quotas?

Accepted Answer

Tariffs and quotas are both trade barriers used to protect domestic industries from foreign competition. Tariffs involve additional taxes on imported goods, while quotas limit the amount of a particular good that can be imported. Both policies seek to reduce the amount of foreign competition that domestic firms face. While tariffs can increase government revenue, quotas are not necessarily designed for this purpose. Neither tariffs nor quotas necessarily increase economic efficiency, and they are not voluntary export restraints as those are agreed upon between countries.

Question 6

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions?

Accepted Answer

Economists who oppose trade restrictions argue that while trade restrictions may save a specific number of jobs in the short run, they ultimately result in increased costs for consumers. This is because trade restrictions limit competition, allowing domestic producers to charge higher prices without fear of being undercut by cheaper imports. As a result, consumers end up paying more for goods across the board, which can offset any benefits gained from saving a limited number of jobs.

Question 7

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the value of consumer surplus after the imposition of the quota?

Accepted Answer

The answer of Figure 9-3
  
Since 1953 the United...

Question 8

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the value of the deadweight loss as a result of the quota?

Accepted Answer

The answer of Figure 9-3
  
Since 1953 the United...

Question 9

In the United States during the Great Depression,tariffs were ________ than they were following World War II,and ________ than they are today.

Accepted Answer

The answer of In the United States during the Great...

Question 10

Figure 9-5
 
-Refer to Figure 9-5.Fenwick currently both produces and imports pistachios.The government of Fenwick decides to restrict international trade in pistachios by imposing a quota that allows imports of only 5 million pounds each year.Figure 9-5 shows the estimated demand and supply curves for pistachios in Fenwick and the results of imposing the quota.Answer questions a-j using the figure.
a.If there is no quota what is the domestic price of pistachios and what is the quantity of pistachios demanded by consumers?
b.If there is no quota how many pounds of pistachios would domestic producers supply and what quantity would be imported?
c.If there is no quota what is the dollar value of consumer surplus?
d.If there is no quota what is the dollar value of producer surplus received by producers in Fenwick?
e.If there is no quota what is the revenue received by foreign producers who supply pistachios to Fenwick?
f.With a quota in place what is the price that consumers of Fenwick must now pay and what is the quantity demanded?
g.With a quota in place what is the dollar value of consumer surplus? Are consumers better off?
h.With a quota in place what is the dollar value of producer surplus received by producers in Fenwick? Are domestic producers better off?
i.Calculate the revenue to foreign producers who are granted permission to sell in Fenwick after the imposition of the quota.
j.Calculate the deadweight loss as a result of the quota.

Accepted Answer

The answer of Figure 9-5
 
-Refer to Figure 9-5.Fenwick currently...

Question 11

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the value of domestic producer surplus after the imposition of a quota?

Accepted Answer

The answer of Figure 9-3
  
Since 1953 the United...

Question 12

If the U.S.government implements a tariff on Chinese tire imports all of the following would be made worse off except

Accepted Answer

American tire manufacturers would benefit from the tariff as it would reduce competition from Chinese imports, potentially allowing them to increase prices and sales.

Question 13

If the U.S.government implements a tariff on Chinese tire imports,the price of Chinese-made tires will ________,the quantity demanded will ________,and consumer surplus will ________.

Accepted Answer

When a tariff is implemented on Chinese tire imports, the price of Chinese-made tires will increase due to the additional cost of the tariff. As a result, the quantity demanded will decrease as consumers will seek alternative, cheaper options. Consumer surplus will also decrease as consumers will no longer have access to the lower-priced Chinese tires.

Question 14

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the value of revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?

Accepted Answer

The answer of Figure 9-3
  
Since 1953 the United...

Question 15

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

Accepted Answer

From Figure 9-3, we can see that the point at which the domestic supply curve intersects the demand curve is at a quantity of 34 million pounds. This is the quantity of peanuts consumed in the domestic market. At this quantity, we can see that the domestic supply (orange line) is equal to the total supply (blue line) as imports are completely restricted by the quota. Therefore, the portion of this quantity that is supplied by imports is zero. Thus, the correct answer is C) Domestic consumption equals 34 million pounds of which 16 million pounds are imports.

Question 16

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the value of domestic producer surplus without a quota?

Accepted Answer

When there is no quota, the domestic producer surplus is the sum of areas A+B+C. Using the graph, the value of A+B+C is $5 million.

There is no best choice(s) question provided.

Question 17

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.If there was no quota,how many pounds of peanuts would be imported?

Accepted Answer

The answer of Figure 9-3
  
Since 1953 the United...

Question 18

A quota is a numerical limit on the quantity of a good that can be imported.

Accepted Answer

A quota is defined as a numerical limit on the quantity of goods that can be imported.

Question 19

Governments sometimes erect barriers to trade other than tariffs and quotas.Which of the following is not an example of this type of trade barrier?

Accepted Answer

Requiring employees to pay income taxes does not directly affect international trade, whereas the other options all involve regulations that affect the import or export of goods and services.

Question 20

Figure 9-4
 
-Refer to Figure 9-4.Suppose the U.S.government imposes a $0.25 per pound tariff on rice imports.Figure 9-4 shows the demand and supply curves for rice and the impact of this tariff.Use the figure to answer questions a-i.
a.Following the imposition of the tariff,what is the price that domestic consumers must now pay and what is the quantity purchased?
b.Calculate the value of consumer surplus with the tariff in place.
c.What is the quantity supplied by domestic rice growers with the tariff in place?
d.Calculate the value of producer surplus received by U.S.rice growers with the tariff in place.
e.What is the quantity of rice imported with the tariff in place?
f.What is the amount of tariff revenue collected by the government?
g.The tariff has reduced consumer surplus.Calculate the loss in consumer surplus due to the tariff.
h.What portion of the consumer surplus loss is redistributed to domestic producers? To the government?
i.Calculate the deadweight loss due to the tariff.

Accepted Answer

The answer of Figure 9-4
 
-Refer to Figure 9-4.Suppose the...

Quiz 7: Comparative Advantage and the Gains From International Trade

The United States would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

a.Distinguish between a tariff and a quota. b.In what ways are tariffs and quotas similar? c.In what ways are tariffs and quotas different? d.Why might a foreign producer prefer a quota rather than a tariff?

Which of the following statements is true?

Which of the following is common to both tariffs and quotas?

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the value of consumer surplus after the imposition of the quota?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the value of the deadweight loss as a result of the quota?

In the United States during the Great Depression,tariffs were than they were following World War II,and than they are today.

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the value of domestic producer surplus after the imposition of a quota?

If the U.S.government implements a tariff on Chinese tire imports all of the following would be made worse off except

If the U.S.government implements a tariff on Chinese tire imports,the price of Chinese-made tires will ,the quantity demanded will ,and consumer surplus will .

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the value of revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the value of domestic producer surplus without a quota?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.If there was no quota,how many pounds of peanuts would be imported?

A quota is a numerical limit on the quantity of a good that can be imported.

Governments sometimes erect barriers to trade other than tariffs and quotas.Which of the following is not an example of this type of trade barrier?